]]>The Council of the European Union – the part of the EU legislature that represents member states – has formally laid out its stance on changing incoming legislation around roaming and net neutrality. This means negotiations with the European Parliament can formally commence, and as some parliamentarians warned on Tuesday, this will be a feisty fight.

The Council’s position opposes the Commission and Parliament’s original intention of eliminating roaming surcharges for those travelling within the EU by the end of this year. Instead, from mid-2016 people would get to use a daily 5MB “basic roaming allowance” when crossing borders that would be the same as domestic mobile data costs. Above that, operators will be able to charge extra for roaming, but not more than the wholesale costs levied by the carrier whose network is being roamed onto.

It would only be in mid-2018 that member states would ask the Commission to “assess … what further measures may be needed with a view to phasing out roaming charges” and then maybe propose new laws. In other words, the Council wants the abolition of roaming fees to be put on ice, despite the widespread push for a European digital single market.

As for net neutrality, “agreements on services requiring a specific level of quality will be allowed, but operators will have to ensure the quality of internet access services.” Again, this does not gel with the strict rules passed by the European Parliament last year, but EU digital chief Andrus Ansip, who is more bullish on the issue of the single digital market, has indicated that he is more sympathetic to this particular compromise.

According to sources in the European Parliament, many countries backed the watering-down of the roaming changes, with only Cyprus and the Italians saying the proposals didn’t go far enough. The strongest opponents of a tough net neutrality text were apparently the Germans and the British. It is probably worth nothing that two of Europe’s most powerful telcos, Deutsche Telekom and Vodafone, are German and British respectively.

Interestingly, the mobile industry body GSMA said in a statement that the reduced scope of the telecoms reform proposals, under the Council’s amendments, represented “a missed opportunity”. However, GSMA head Anne Bouverot said that “the immediate priority is for these proposals to reach a positive conclusion so that we can start the process of creating a truly Digital Single Market that will benefit Europe’s citizens and businesses.” The organization is against “overly prescriptive” neutrality rules, but a bit less openly agitated about the roaming elements.

The European consumer organization BEUC blamed telcos for lobbying against more meaningful roaming changes, arguing that a focus on wholesale prices could hinder competition (after all, Europe’s big telcos span many countries and will be both the buyer and supplier).

BEUC legal chief Guillermo Beltrà said:

It is no secret that the big telecom industry has done their utmost to delay the abolition of roaming charges. The end of roaming has been in the making for a very long time, and this is something that telecoms have known and should be ready for. In fact, they are also to benefit from the new consumer demand that will emerge once roaming is abolished.

If the Parliament is to successfully push back against the watering-down of the roaming proposals, a majority of parliamentarians will need to join the fight.

So far, the second- and fourth-largest blocs in the European Parliament (the Socialists and Democrats and the Liberals and Democrats respectively) have both indicated that they will fight the Council hard.

The largest bloc, the center-right European People’s Party, has also previously taken much credit for shepherding through the reforms, and the single-market-motivated Commission will no doubt be right behind them. The net neutrality situation looks a bit less clear-cut.

Whatever happens, this should be entertaining to watch.

This article was updated at 5.15am PT to include the GSMA statement, and again at 6.10am PT to include information from my parliamentary sources. It was also updated on 5 March to include BEUC’s statement.

All the traffic has to be treated equally. The Internet has to stay open for everybody. The president of the United States is using our wording — the wording of the European Parliament in the United States of America… It is allowed to have higher speeds — but not at the expense of others.

Europe’s net neutrality rules were proposed by Ansip’s predecessor, Neelie Kroes, as part of a “Telecom Package” of reforms. Now that it has gone through Parliament, which tightened its definitions of “net neutrality” and the “specialized services” that telecoms firms would be allowed to treat differently from normal internet services, the package is in its final legislative stage: negotiations between the Commission and the Council of the European Union, which represents the national governments of EU member states.

Last week, leaked documents drawn up by the current Italian presidency of the Council showed that member states want those tight definitions removed, and the rules-based approach to net neutrality changed to one of principles that each country could interpret differently. The document also pointed to a revision of Kroes’s proposals for abolishing intra-EU roaming fees and harmonizing radio spectrum deployment across the Union.

A week before that, another leak suggested that Ansip’s boss, Commission President Jean-Claude Juncker, had asked his commissioners to look out for under-development laws “which we should review together, for example because they have no realistic chance of being adopted in the near future, or because the degree of ambition achievable does not match the objectives sought.”

The same leak referred to a “major new initiative” called the “Digital Single Market Package”, which may indicate something to replace the Telecom Package.

As I noted last week when the Council document leaked, Juncker is known as someone who wants European countries to be drawn closer together. If the Council wants to move against the harmonization of telecommunications rules, creating a patchwork of differing national laws, it would be hard to see Juncker and his “vice president for the digital single market” – Ansip – accepting this outcome.

It remains to be seen whether the answer to this conundrum would involve an about-face from the Council, a reboot of the entire EU net neutrality proposal, or a compromise that leaves Europe without meaningful net neutrality rules.

]]>The British fixed-line carrier BT is in preliminary talks to buy mobile operator O2 from its Spanish parent, Telefonica, it said on Monday. It is also reportedly considering buying EE.

In a statement, BT said it was looking to buy a mobile carrier and had “received expressions of interest from shareholders in two U.K. mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business.”

According to the Financial Times’ sources, the other carrier is EE, the joint venture between Deutsche Telekom and France’s Orange. BT currently provides mobile services to small businesses in the U.K. as a mobile virtual network operator (MVNO), using EE’s network.

“We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements,” BT said. “We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the U.K.”

BT made its statement following Spanish reports about Telefonica striking a “strategic alliance with British Telecom to create a European giant” that would take on the might of the U.S. carrier AT&T. O2 has been making noises about selling itself off for months.

O2 UK actually began life as BT Cellnet, before the British incumbent made what many see as an ill-advised decision to get out of the mobile carrier business in 2005 by selling it to Telefonica. It became apparent that BT wanted to get back into the business in early 2013, when it spent £186 million ($292 million) on 4G spectrum in a long-awaited auction.

Given the amount of spectrum BT, O2 and EE hold in combination, and other potential competition concerns, it is unlikely that BT would buy more than one mobile carrier, if indeed it buys one at all. One thing that’s worth noting, though, is that new EU digital economy commissioner Günther Oettinger has indicated that he favors greater consolidation in the European telecommunications industry, to create stronger regional players.

]]>Mobile carriers are always trying to find new places to insert themselves in the mobile value chain. They want to be indispensable, not just suppliers of commoditized connectivity that lets others make big money off new services running over the carriers’ networks.

But what can carriers in a competitive market can offer that no one else can? Their presence at the most important gate – the connection between the mobile user and the wider world. They manage the connection on a device that’s becoming more personal by the year, a device through which people live their lives. And there’s more than one thing they can do with that position of power.

Operators can use their stewardship of the user’s identity, represented by their SIM card and phone number, to act as a provider of security and guardian of the user’s privacy. More on that shortly, but let’s look first at the other path – privacy-busting for money, as exemplified by Verizon.

The permacookie

For the last couple of years, Verizon has been making it easy to track many of its mobile users. As part of an ad-targeting program, the carrier has been adding a unique identifier header (UIDH) string to the HTTP requests sent by users’ devices – the purpose is to make it easier to deliver targeted advertising to the user, but as Wired reported last week, the UIDH gets sent out even when customers have opted out of the carrier’s marketing program.

It appears not all Verizon customers are affected by this, but other carriers may employ similar practices, such as AT&T and the U.K.’s Vodafone. The implications are fairly appalling: even when customers think they’ve opted out, they’re still trackable across every site they visit. Great news for ad networks that are irritated by manufacturers’ shift away from persistent device identifiers, and perhaps for intelligence agencies too.

Because cookies don’t work on phones as such, no other party, except for the device vendors, has the ability to play this game, and the device vendors are at least trying to make a show of giving users control over their privacy. Apple‘s Identifier for Advertisers (IDFA) and Google‘s Advertising ID for Android both let users opt out of being tracked for marketing purposes altogether.

Consumers who care about privacy may feel reassured by those moves, and they may see carriers effectively providing ad networks with a way around these privacy protections as something of a betrayal. It may be that Verizon’s UIDH system is badly designed, as Stanford’s Jonathan Mayer has suggested, but either way it’s not going to engender trust.

Identity protector

Now let’s have a look at a very different scheme that also gives carriers a valuable role in the online ecosystem. It’s called Mobile Connect, and it’s a program that’s being developed under the auspices of carrier trade body the GSMA.

With Mobile Connect, the user’s phone number – managed by the carrier – becomes their login credential for web services from news sites to banking. Instead of choosing a login mechanism such as Google or Facebook, the user chooses Mobile Connect, enters her phone number (which doesn’t go to the web service itself), then enters a pin code when challenged on her phone. It’s based on a new standard called OpenID Connect. A couple of operators have set it live already and big players like Orange will dive in soon, and the big benefit is supposed to be privacy protection.

As GSMA mobile identity chief Marie Austena explained to me, Mobile Connect will give carriers a wider view of which services their customers are using across the desktop and mobile, but not beyond the level of person-X-logged-into-service-Y. “The extent to which they can use this information is very limited – only for the purposes of their core business,” Austena told me in an interview earlier this month.

“Consumers are often using their Twitter or Facebook accounts to log in, but of course that has privacy implications,” Austena said. “This is about having another secure way of authenticating and combining that with privacy protection – this is pretty much the starting point for Mobile Connect.”

There’s certainly some cause for suspicion here, particularly in countries such as the U.K. and Australia that force operators to hang onto user metadata for the authorities’ benefit, but overall it’s not a bad idea. A phone number is all about identity anyway – why not use that in the online context to provide a trusted alternative to clunky old passwords and the mechanisms of tracking-mad web firms?

The idea only works, though, if the carrier can plausibly play the part of a trusted authentication provider. It all falls apart if the carrier has skin in the ad game – a change in role that makes it no better than Google or Facebook, from a privacy perspective at least. As far as I can tell, Verizon and other suspected supercookie-planting carriers aren’t trying to play the Mobile Connect authentication game, for now at least. But they should be aware that tracking and profiling users’ mobile internet usage is incompatible with that role.

They’re choosing to serve advertisers rather than their users. If their rivals find success in playing the role of trusted privacy guardian and security provider, that may turn out to be a bad marketing call.

This article was updated at 7.50am PT to note that the UIDH system is not associated with the Verizon Selects program, but rather a separate effort. A Verizon spokesperson wrote to me: “The UIDH can be used to help associate devices with targeted ad campaigns for Precision Market Insights from Verizon’s Relevant Mobile Advertising program to the extent a customer has not opted-out of the program.”

]]>The Berlin startup Xyo, which has deals with partners such as T-Mobile, has sold its app search engine and contextual advertising tech to the U.S.-based Mandalay Digital Group, the proprietor of one of Xyo’s biggest rivals, Digital Turbine.

Two of Xyo’s co-founders, Zoe Adamovicz and Marcin Rudolf, will join Digital Turbine, with Adamovicz heading up Digital Turbine’s EMEA business and Rudolf the firm’s R&D operations. The other co-founder, Matthäus Krzykowski, will take a breather for a few months. Five engineers also come as part of the package.

There’s no stated figure for the deal but, based on a mix of the employee transfer with that of intellectual property rights, and other performance-related elements, I’d put the total amount near $20 million. (Mandalay’s SEC filing on Thursday mentions a figure of $2.5 million, but that’s only for the IP and partner contracts — I understand the other elements of the transaction are weightier in financial terms.)

Xyo the company still exists, holding a significant interest in “app economy quantification” spin-off Priori Data.

Digital Turbine is much better funded than Xyo, but Xyo arguably had the better technology. According to a statement, Digital Turbine will “immediately integrate” that tech, which uses over 1,000 fine-grained categories of applications to solve one of the biggest problems in modern app stores – the fact that very few apps, relatively speaking, surface to the top of the broad categories people see.

This is particularly useful when we’re talking about small screens that are less conducive to typing in detailed queries. According to the statement, Xyo’s tech will be part of Digital Turbine’s imminent rollout with Verizon and Vodafone Australia.

“As part of Digital Turbine, Xyo’s revolutionary app discovery technology will reach consumers at scale much more quickly,” Adamovicz said in the statement. “But apps are just a start. Consumers have entered a new age where digital content is personally recommended on their phones. We are very excited to be part of Digital Turbine as we work together to develop new technologies that can help shape this consumer world.

I understand that Xyo’s app search website and Android app will stay operational for now, which would make sense as they provide a showcase for prospective partners.

This article was updated at 7.15am PT to add details about Mandalay’s SEC filing, which wasn’t public at the original time of writing.

]]>British mobile operators have, according to a Sunday article in the Financial Times, rejected a proposal by the government to have them share their networks. The plan was formulated as a way of ensuring mobile coverage in rural areas where the economics of building out the network aren’t so positive – it would let an underserved EE subscriber, for example, roam onto O2’s network if that offered a nearby mast. However, the carriers reportedly claimed this was a no-go on both technical and legal grounds, leaving the government asking that they come up with a better idea to achieve the same aim.

]]>A high-level European Union report has recommended forcing broadcasters to stop using 700MHz spectrum by 2020, so the airwaves can be freed up for wireless broadband.

These particular airwaves are great for connectivity – with radio spectrum, the lower the number, the better it is at propagating transmissions over great distances and into buildings. That’s why, over in the U.S., T-Mobile shelled out $2.6 billion for some of Verizon’s 700MHz holdings at the start of this year.

Hoping for harmony

In Europe, 700MHz (really 694-790MHz) is still largely reserved for TV broadcasts and wireless microphones, as is most other UHF spectrum. However, the Monday report by Pascal Lamy, a former trade commissioner and WTO chief, said it should be reserved for wireless broadband by 2020 – give or take two years.

This would allow a more harmonized approach to 700MHz across what is supposed to be a single market. Currently, countries such as Germany, Finland and Sweden are keen to steam ahead with using 700MHz for broadband, but that would lead to fragmentation and make life difficult for device manufacturers.

As a sop to the broadcasters, Lamy recommended that they be able to continue using the UHF spectrum below 700MHz (i.e. 470-694MHz) until 2030. This would mean Europe defending these airwaves for broadcasters when it comes to global discussions, though the Commission said on Monday that “some flexibility could nevertheless be catered for through the development of ‘down link only’ technologies that give priority to primary broadcasting networks.”

Additionally, there would need to be a full review of all UHF spectrum in Europe by 2025, Lamy recommended.

“For too long the broadband and broadcasting communities have been at loggerheads about the use of the UHF spectrum band. There have been many different views and perspectives. On the basis of discussions with the two sectors, I have put forward a single scheme that could provide a way forward for Europe to thrive in the digital century,” Lamy said in a statement.

Timescale issues

The report’s formulation wasn’t exactly harmonious. It was supposed to be the product of a high-level group of industry stakeholders, but it ended up having just Lamy’s name on it – the group couldn’t agree a compromise.

If the Commission goes ahead with Lamy’s recommendations (they’re still waiting on a separate report from the member states) then the broadcasters will lose 30 percent of their spectrum holdings, and will be forced to use more efficient compression and transmission technologies. The Commission reckons this would allow traditional broadcast operations to continue, while providing space for the explosion in demand for mobile data.

Still, the carriers aren’t entirely happy with Lamy’s report. Industry body the GSMA said on Monday that the UHF review should happen in 2020 not 2025, and that broadcasters shouldn’t get their turf defended for so long.

“We are concerned that the report’s recommendations on the sub-700MHz (470-694MHz) band could put Europe at a competitive disadvantage compared to other regions,” GSMA Director General Anne Bouverot said in a statement. “Limiting Europe’s flexibility on the possible co-existence of mobile and digital broadcast services until 2030 will discourage investment in world-leading mobile networks.”

]]>The European Commission has given its final approval to Telefónica’s $10.7 billion takeover of KPN’s German mobile carrier, E-Plus.

The Commission said back in July that it was in favor of the deal, but on the condition that Telefónica, which already owns Germany’s O2, sell 30 percent of the merged carrier’s network capacity to a mobile virtual network operator (MVNO). This was because, without such a condition, Germany would only be left with three carriers with physical networks — not a competition-friendly scenario.

“With the final clearance of the European Commission now granted, we are able to close the transaction soon, and create a leading digital telecommunication company in Germany,” Telefónica Deutschland CSO Markus Haas said in a statement on Friday.

Telefónica said it expected the acquisition to close in the third quarter of this year.

]]>Vodafone’s share price rose Friday on rumors of a takeover bid by AT&T. We’ve so been here before — AT&T promised back in January that it wouldn’t launch a bid for the subsequent 6 months. China Mobile is also reportedly interested in buying a stake in Vodafone. On top of that, AT&T is also reportedly considering buying Ireland’s Eircom as a way into Europe, and Vodafone itself was rumored to be considering a bid for T-Mobile US, so y’know, it’s probably worth seeing what actually happens before getting too excited. One thing that has happened, though, is that Vodafone just stumped up $96 million to take over Greek fixed-line provider Hellas Online.

]]>Net neutrality fans had better cover their eyes and ears: Facebook has bought a Finnish startup called Pryte, which helps mobile operators charge for data on a per-app, short-term-pass basis. According to a Tuesday post by Pryte, the purchase will aid Facebook’s Internet.org initiative on its quest to connect the unconnected.

The purchase price remains undisclosed, and it seems Facebook was mostly interested in hiring the Pryte team (Pryte’s app has never been released to the public.) Facebook said in a statement:

“The Pryte team will be an exciting addition to Facebook. Their deep industry experience working with mobile operators aligns closely with the initiatives we pursue with Internet.org, to partner with operators to bring affordable internet access to the next 5 billion people, in a profitable way.”

Facebook, the money-spinning offramp

Facebook already has “Facebook Zero” deals with carriers in developing markets that see the social network offered for free, with users paying the carrier if they want to click through to normal web content. This is a way to get people on the internet for the first time, ideally as paying users, but the practice has been banned in Chile because it’s anticompetitive — it creates a huge blocker for any potential Facebook rival.

The ability to charge for data on an ad hoc basis could build on this strategy. It’s not hard to see a scenario where Facebook acts as a portal, operated in conjunction with local carriers in developing markets to provide a metered offramp to the paid-for web or to other chosen apps. That’s certainly a way to get poorer people onto the mobile internet, but it’s a completely different ballgame from the neutral, flat-rate, open-web model enjoyed in developed markets.

I’m being a bit speculative here, but not wildly so, according to sources close to the action. The Pryte buy certainly goes well with Facebook’s purchase last year of data compression specialist Onavo — now the social network can go to carriers with the tools to help them ease the load on their networks while charging people on a basis that’s not reliant on data volume.

Reducing complexity

As for how much this sort of thing will hurt the egalitarian web, that’s a matter of debate. A Disruptive Analysis report into new non-neutral mobile broadband business models, published this week, suggested that various non-neutral models will account for only six percent of overall mobile internet revenues in five years’ time. Dean Bubley, the report’s author, reckons most of these neutrality-busting models will prove unrealistic in practise. However, he told me Facebook is probably better-placed than anyone else to make a combination of zero-rating and paid-app tactics work.

According to Bubley, one of the biggest blockers to these new-fangled schemes lies in apps’ porous borders (data flows between them) and Facebook may be able to use Pryte’s smarts to overcome these technical problems.

“It’s always hard for telcos to get to grips with [charging on a per-app basis] because the application environment changes too fast for these things to keep up with — there’s new stuff that breaks third-party middleware,” Bubley said. “Facebook is one of the few companies that has a number of software engineers to throw at these things to make sure they work, and also do network integration.”

He also pointed out that Apple isn’t much of a player in the developing world, making these new models somewhat more workable there: “You can get away with doing a hell of a lot more on Android or web-based OSs than you can on iOS. Apple doesn’t give you access to build a really good connection manager and do things app-by-app.”